DOJ claws back over $5.6B in False Claims Act settlements during fiscal 2021

The Department of Justice obtained more than $5.6 billion in False Claims Act settlements and judgements against federal contractors during fiscal 2021, according to new figures released earlier this week.

Over $5 billion of the settlements during the period involved the health care industry, including drug and medical device manufacturers, and care providers, according to the department.

The figure is more than double the $2.2 billion raised from False Claims Act (FCA) cases during the prior year period, and comes as the DOJ in October announced a new Cyber-Civil Fraud Initiative, under which it intends to prosecute contractors working with federal agencies that fail to report cyber incidents.

During the course of this year, two key areas of enforcement action pursued by the DOJ under the FCA included cases involving unlawful kickbacks and procurement fraud. Two examples cited by the DOJ:

• Boston-based company Athenahealth agreed in February to pay $18.3 million to settle allegations that it invited prospective customers to lavish, all-expenses-paid recreational events to generate sales of its EHR product to the Department of Health and Human Services.

• Insitu Inc. agreed in January to pay $25 million to settle allegations that it knowingly submitted false cost and pricing data for contracts to supply the Department of Defense with Unmanned Aerial Vehicles, and Level 3 Communications paid $12.7 million to resolve allegations that two subcontractors paid kickbacks to level three managers.

Since announcing its Cyber-Civil Fraud Initiative, DOJ leaders have said they expect whistleblowers to play a key role in the FCA enforcement push, and that it will use all available legal resources to protect those who report wrongdoing.

Under the FCA any person who submits false records to the government can be forced to pay triple the damages caused to the government from fraudulent contract submissions. The offending entity can also be hit with a civil penalty of up to $10,000.

The FCA was first enacted in 1863 in response to defense contractor fraud during the American Civil War. It was amended in 1986 to increase incentives for whistleblowers to come forward with allegations of fraud.

In a press release, acting Assistant Attorney General Brian Boynton said: “Ensuring that citizens’ tax dollars are protected from fraud and abuse is among the department’s top priorities.” He added: “The False Claims Act is one of the most important tools available to the department both to deter and to hold accountable those who seek to misuse public funds.”